Investing.com - Ethereum may be close to its finest hour, writes Reuters.

This year, the world's No. 2 cryptocurrency has remained on the sidelines while its big brother, BTC, has soared to all-time highs amid the emergence of new U.S. exchange-traded funds designed to track its price.

However, due to the imminent appearance of ETF funds on the market for Ethereum, some market participants predict that an increase in the price of Ethereum, which will exceed the historical peak of November 2021 of $4,867.60, is just around the corner.

“Consider the fact that Ethereum has about half the spot liquidity,” said Thomas Perfumo, head of strategy at crypto exchange Kraken, referring to Ethereum trading on exchanges compared to Bitcoin. “Half the amount of liquidity means it would take fewer absolute dollars entering the market to have the same impact on the price of Ethereum.”

There are already many investors in the “cryptocurrency graveyards” who thought they could reliably predict the situation in this risky, unstable market.

A potential token dump from defunct Japanese exchange Mt. Gox has had a major impact on the market in recent days, hitting Bitcoin and Ethereum. Other factors, such as the timing of the US Federal Reserve's interest rate cut and the country's upcoming presidential election, could also impact cryptocurrencies.

“Market participants should watch for a return to volatility in both traditional and cryptocurrency markets,” Jag Kooner, head of derivatives at crypto exchange Bitfinex, said in a note. “Regulatory changes and macroeconomic policies will play a critical role in shaping market dynamics.”

In March, Bitcoin soared to new heights, reaching $73,803.25, 2 months after the first Bitcoin spot ETFs began trading, at a pre-launch price of $45,947. Ethereum, on the other hand, remains far behind its all-time high reached in March, trading at just $4,093.7.

According to experts, the situation may change when Ethereum ETFs hit the market in the coming weeks. They note that the supply of ETH is limited, and that inflows into Ethereum ETFs could have a more significant impact on the price of this token compared to Bitcoin.

The new Ethereum ETFs are not expected to generate the same investor enthusiasm as the Bitcoin spot ETFs, which attracted about $38 billion in assets as of the end of June, according to Morningstar Direct.

A study by crypto asset manager Grayscale Investments, which is looking to convert its existing ETH trust into an ETF, found that spot ETH ETFs could meet 25%-30% of the demand for Bitcoin funds.

“But as market cap declines (given that ETH is about one-third of BTC's), for every dollar of inflows into an Ethereum ETF there could be a comparable price impact,” said Zach Pandl, managing director of research at the crypto asset manager. Grayscale Investments. “I believe this is reminiscent of what we thought about BTC earlier this year, when we thought there would be significant demand for the fund and it would interact with a supply that is more limited than generally believed.”

Unlike Bitcoin, Ethereum can be pledged, or locked for a certain time, in exchange for profitability. Pandl estimates that just under 30% of Ethereum's supply is pledged as collateral, with another 10% locked in smart contracts. This reduces the supply of ETH available for new ETFs to purchase, which could cause the price to rise, he said.

“The reason why BTC ETFs moved the price is because there was more demand for these ETFs than the new supply of Bitcoin,” said Matt Hougan, chief investment officer of Bitwise (NYSE:BITQ). “In the case of [Ethereum] supply, the situation is even worse.”

Predictions on how an Ethereum ETF will affect the price of the token vary widely, with international bank Standard Chartered (LON:STAN) estimating that ETH could reach $8,000 by the end of the year. VanEck, which is set to launch an Ethereum spot ETF, raised its target price for the token to $22,000 by 2030 in May.

However, the impact of the new ETFs may already be baked into the price of Ethereum, some market observers have warned. Even though ETH did not reach its all-time high, it has grown by more than 29% this year.

“As for Bitcoin and Ethereum, they are valued higher than when Bitcoin funds launched earlier this year. This may indicate a slightly smaller effect,” Grayscale’s Pandl said.